Author Topic: Can I afford a bigger home  (Read 601 times)

mommy214

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Can I afford a bigger home
« on: February 07, 2019, 12:44:18 PM »
I am looking to buy a new home I currently have one that I have lived in for 12 years and owe about 52k on. I want to buy something bigger for 229k. I am wondering if I have enough equity in my current home for the down payment so my payments stay the same or within 250.00$. I think my current home is worth 140K and I pay 700 per month with taxes and insurance.


neo von retorch

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Re: Can I afford a bigger home
« Reply #1 on: February 07, 2019, 12:56:27 PM »
First, some questions to fill out the blanks:
 - Do you only care if you can "afford" it based on the equity / down payment, or should we take into considering your overall income / budget and long-term goals that will be affected?
 - Do you know how much the taxes/insurance will be on the new home? This will also affect the "mortgage payment" assuming those things are escrowed and bundled.

Sounds like
 * Home Value: $140k
 * Mortgage: $52k
 * Equity: $88k

If we assume you lose ~10% to various selling fees, you have $74k in equity. Put that towards a $229k home and you might have a mortgage balance of $155k (assuming no other closing costs as buyer - this is unlikely!). The actual principal + interest payment on that will depend on the term and APR you would get on your new mortgage.

- Were you planning for a 30-year fixed rate mortgage?
- Do you have a bank picked out, and an estimated APR? Have they given you an estimate for closing costs?

mommy214

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Re: Can I afford a bigger home
« Reply #2 on: February 07, 2019, 01:16:00 PM »
First, some questions to fill out the blanks:
 - Do you only care if you can "afford" it based on the equity / down payment, or should we take into considering your overall income / budget and long-term goals that will be affected?
 - Do you know how much the taxes/insurance will be on the new home? This will also affect the "mortgage payment" assuming those things are escrowed and bundled.

Sounds like
 * Home Value: $140k
 * Mortgage: $52k
 * Equity: $88k

If we assume you lose ~10% to various selling fees, you have $74k in equity. Put that towards a $229k home and you might have a mortgage balance of $155k (assuming no other closing costs as buyer - this is unlikely!). The actual principal + interest payment on that will depend on the term and APR you would get on your new mortgage.

- Were you planning for a 30-year fixed rate mortgage?
- Do you have a bank picked out, and an estimated APR? Have they given you an estimate for closing costs?

I would like to keep my payment close to 950 per month if possible for all off it. lets assume the taxes will be 3000.00 for the new home.I have not talked to anyone regarding a mortgage yet I just want to see if its possible to keep my payment around 950.

I have never sold a home before and have no idea if I have enough to put down. I have a good credit score and my debt to income ratio is 16%.

August26th

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Re: Can I afford a bigger home
« Reply #3 on: February 07, 2019, 01:38:26 PM »
Based on the assumption above that youíd take out a new loan of 155K, I donít think itís possible to keep the total payment around $950.

Your principal and interest alone on the new loan will be near $800 per month (assuming a rate of about 4.625% on a 30-year fixed.) If your property taxes are $3,000 per year, thatís $250 a month. I donít know what your insurance would be, but letís assume around $900 per year, or $75 per month.

You are looking at a total payment of $1,125 per month. Sounds like youíd easily qualify for that amount, but it may be higher than you are willing to pay.

mommy214

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Re: Can I afford a bigger home
« Reply #4 on: February 07, 2019, 01:50:07 PM »
So I guess with that said we need to know my monthly finances and income to see if its a good idea or not to sell and move.

I ruffly make 82K per year and spend 700 on my home about 300 on utilities, 800 in car expenses, 400 on food, 200 on phone internet, 400 on health insurance, about 300 on mis. stuff, 480 in daycare will end in summer 2020, 100 student loan. No credit card debt.

patchyfacialhair

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Re: Can I afford a bigger home
« Reply #5 on: February 07, 2019, 02:09:11 PM »
Is that 82k before tax? Are you saving for retirement?

Because putting some money for retirement and withholding taxes will put you in a different spot than 82k take home.

If you're working with 60k after taxes and retirement, that's 5k per month,

1200 for new house payment (ballpark)
400 on utilities (since the home will be bigger)
800 car expenses
400 food
200 phone internet
400 health insurance
300 misc
480 daycare
100 student loan

Leaves 720 per month unaccounted for. But if your taxes are higher, then this 720 is lower.

Don't forget to budget for new home expenses (furnishings and decor) and home maintenance, which will eat up that 720 wiggle room pretty quick.

rothwem

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Re: Can I afford a bigger home
« Reply #6 on: February 14, 2019, 07:04:51 AM »
Didn't you just post this?

https://forum.mrmoneymustache.com/welcome-to-the-forum/is-it-time-to-move/msg2283218/#msg2283218

I think the consensus there was that you probably ought to stay put. 

Edit: read the rest of it after you updated that you have an hour commute.  Still, probably ought to combine these two threads, it doesn't make sense. 
« Last Edit: February 14, 2019, 07:06:41 AM by rothwem »